Why Is Digi International (DGII) Stock Trending After Hours?

Digi International Inc. (NASDAQ:DGII) shares are trending on Wednesday night.

Shares of the Minnesota-based provider of business- and mission-critical Internet of Things (IoT) connectivity fell 14.87% to $57 in after-hours trading on Wednesday after announcing fourth-quarter and fiscal year results.

The results covered the period ended Sept. 30.

What Does the Q4 Data Say?

Revenue for the quarter came in at $143.32 million, topping the analyst estimate of $140.30 million by 2.15%. According to the company’s earnings release, quarterly revenue rose 25% year over year.

Earnings per share of $0.78 beat the expected $0.75 by 4%.

Operating margin expanded 400 basis points to 16.5%. Gross margin slipped 20 basis points to 63.7%.

Net income rose 50% to $15 million. Adjusted EBITDA climbed 43% to $42 million. Annualized recurring revenue (ARR) hit $197 million, up 30%.

FY26 Shows Double-Digit Growth

Digi reported a 24% increase in full-year revenue to $535 million. Net income rose 32% to $54 million, or $1.38 per diluted share.

Adjusted EBITDA increased 37% to $148 million, while the operating margin reached 14.9%.

Fiscal 2027 Guidance Signals Sharp Slowdown

The selloff appears tied to fiscal 2027 guidance, which signals a sharp deceleration. Digi expects revenue growth of 10% to 15% and ARR growth of at least 15%. Adjusted EBITDA growth is forecast at 12.5% to 17.5%.

For the first quarter, Digi projected revenue of $140 million to $144 million. Adjusted EPS is expected between $0.71 and $0.75, below the fourth-quarter figure of $0.78.

Management cited an "evolving global trade framework" and rising component costs, "most notably memory." The company said it will manage these through pricing and supply-chain agility.

CEO Ron Konezny said, "Fiscal 2026 was a defining year for Digi, and it reflects the consistent execution we deliver for our customers."

Digi also agreed to acquire Norway-based Disruptive Technologies for $130 million in cash. Konezny said, "We look forward to securing regulatory approval to close the acquisition of Disruptive Technologies (DT), which is expected before November 30, 2026."

Trading Metrics, Technical Analysis

Digi International has a market capitalization of $2.54 billion, a 52-week high of $86.84 and a 52-week low of $35.15.

The Relative Strength Index (RSI) of DGII stands at 41.92.

The stock has gained 87.62% over the past 12 months.

Price Action: On Wednesday, DGII stock closed at $66.96, up 2.94%, according to Benzinga Pro data.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Photo Courtesy: FabrikaSimf on Shutterstock.com